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Ebay's plans for Skype

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Ebay has definite plans for what it is going to do with Skype, and Meg Whitman, eBay's president and CEO, is equally sure about what they are not going to do.

Whitman, on a conference call today, made it clear that the company is not interested in widening its appeal by becoming some kind of portal. She said eBay had succeeded by being focused and that was not changing.

But she does see future growth for Skype in three separate areas.

Firstly, and most obviously, this will be from integrating Skype onto eBay's auction site. Buyers and sellers send each other five million emails a day. Anything that can speed up and improve this communication should have big benefits for eBay. Additionally, most of the real action on auctions happens in the last few minutes so getting instant answers from sellers should keep more buyers interested and keep the bids going up. The only possible downside to this is that buyer and seller get on so well while chatting on Skype that they make a sale outwith eBay.

Secondly, eBay wants to cement Skype's premier position in the Voice over Internet Protocol market. Skype claims 54m registered users and hopes for 57m by the end of the third quarter. Because it is a virtual peer-to-peer network this growth costs Skype very little while simultaneously making the network more attractive - when one person signs up they are likely to bring friends and family with them to take advantage of free calls. With Google and others getting into the market and continued pressure from telcos it makes sense for Skype to find a friend with deep pockets.

Thirdly, eBay hopes the acquistion of Skype will allow it to do a better job of making money from some existing markets and move into different areas. Whitman explained that eBay currently runs on a transaction fee basis - sellers pay a variety of charges on selling items. But Skype will enable eBay to get into the lead generation business where sellers of products or services pay a fee to receive a phone call from an interested punter. According to Whitman, US firms pay between $2 and $12 for such leads. Sales of new cars, travel, business services and real estate could all be helped by lead generation, a market she valued at $3.5bn a year.

Whitman said Skype would also help in emerging markets such as India where there may be less faith in ecommerce and more of a culture of haggling. It could also help cross border trade where lack of trust is also an issue.

Mark Main, senior researcher at Ovum, told The Reg:: "It's a great deal for Skype but a big gamble for eBay and quite startling." Main said the price seemed excessive and that it is unlikely that Skype users will start selling their possessions on eBay. He also questioned whether real-time voice communication between buyers and sellers would really be welcome - merchants and power sellers are likely to be too busy for trivial enquiries and prefer email communications.

More details on eBay here and Skype here. ®

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